A sale should not be recognized as revenue by the seller at the time of sale if

Question

Quizplus · Accepted Answer

If the buyer has a right to return the product and the amount of future returns cannot be reliably estimated, the sale should not be recognized as revenue by the seller at the time of sale. This is because there is uncertainty surrounding the transaction and the seller cannot confidently recognize revenue until the return period has passed and the amount of returns can be estimated accurately. Option A is incorrect as the mode of payment does not affect the recognition of revenue. Option B is incorrect as the selling price being less than the normal selling price does not impact revenue recognition as long as all other criteria are met. Option D is incorrect as only option C is a valid reason for not recognizing revenue.

A Sale Should Not Be Recognized as Revenue by the Seller